Tuesday, June 17th, 2014View Older Reports
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OVERNIGHT MARKETS AND NEWS
September E-mini S&Ps (ESU14 +0.16%) this morning are up +0.03% and European stocks are up +0.04% ahead of the 2-day FOMC meeting that begins today. Stock gains were limited on concern over escalation of violence in Iraq after insurgents attacked the city of Baquba, 34 miles north of Baghdad. The AP reports that the U.S. may send a limited number of special-forces troops into Iraq that would be involved in training rather than direct combat. Another negative for European stocks was an unexpected decline in German investor confidence for a sixth month. Asian stocks closed mixed: Japan +0.29%, Hong Kong -0.42%, China -1.01%, Taiwan +0.41%, Australia -0.22%, Singapore -0.48%, South Korea +0.39%, India +1.31%. Chinese stocks closed lower after foreign direct investment in China unexpectedly fell in May by the most in 16 months. Debt concerns in China have also increased after data from Standard & Poor's showed Chinese borrowers had $14.2 trillion in debt at the end of 2013, the most of any country including the U.S. which had $13.1 trillion in company obligations. Commodity prices are mixed. July crude oil (CLN14 -0.60%) is down -0.63% on speculation that signs of violence in Iraq may not affect its oil supply. July gasoline (RBN14 -0.13%) is down -0.14%. Aug gold (GCQ14 -0.82%) is down -0.79%. July copper (HGN14 +0.18%) is up +0.38%. Agriculture and livestock prices are mixed. The dollar index (DXY00 +0.03%) is up +0.03%. EUR/USD (^EURUSD) is down -0.06%. USD/JPY (^USDJPY) is up +0.15%. Sep T-note prices (ZNU14 -0.05%) are down -0.5 of a tick.The German Jun ZEW survey of expectations for economic growth unexpectedly fell for a sixth month as it slipped -3.3 to 29.8, weaker than expectations of +1.9 to 35.0 and the lowest in 1-1/2 years. The Jun ZEW current situation survey unexpectedly rose +5.6 to 67.7, better than expectations of unch at 62.1 and the highest in 2-3/4 years.
Eurozone Q1 labor costs rose +0.9% y/y, the smallest increase since the data series began in 2009.
China May foreign direct investment unexpectedly fell -6.7% y/y, weaker than expectations of +3.2% y/y and the largest decline in 16 months.
UK May CPI unexpectedly fell -0.1% m/m and rose +1.5% y/y, less than expectations of +0.2% m/m and +1.7% y/y with the +1.5% y/y gain the smallest annual increase in 4-1/2 years. The May core CPI rose +1.6% y/y, less than expectations of +1.7% y/y and matched the smallest annual increase in 5 years.
U.S. STOCK PREVIEW
Today’s May CPI report is expected to be unchanged from April on a year-on-year basis at +2.0% y/y. Meanwhile, today’s May core CPI is expected to edge higher to +1.9% y/y from +1.8% in April. Today’s May housing starts report is expected to show a decline of -3.9% to 1.030 million following the +13.2% surge to 1.072 million seen in April. Meanwhile, today’s May building permits report is expected to show a decline of -0.9% to 1.050 million, giving back some ground after the +5.9% rise to 1.059 million seen in April. The FOMC at its 2-day meeting that begins today is unanimously expected to taper QE3 by another $10 billion to $35 billion. There are three of the Russell 1000 companies that report earnings today: John Wiley (consensus $0.68), FactSet (1.25), and Adobe (0.30).Equity conferences this week include: Wall Street Journal CFO Network Annual Meeting on Mon-Tue, Canadian Telecom Summit 2014 on Mon-Wed, RBC Capital Markets Global Mining & Materials Conference on Tue, Sterne Agee Executive Summit on Tue, Deutsche Bank Global Consumer Conference on Tue-Wed, Wells Fargo Securities Healthcare Conference on Tue-Wed, Predictive Analytics World Conference on Tue-Thu, Jefferies Global Consumer Conference on Wed-Thu, Nomura Corporate Day on Wed, Citi CorpGlobal Water Conference on Thu, Goldman Sachs European Chemicals Vision Conference on Thu, J.P. Morgan Oil & Gas Corporate Access Day on Thu, Morgan Stanley China Industrials Summit on Thu, and Noia Conference 2014 on Thu.
OVERNIGHT U.S. STOCK MOVERS
SanDisk (SNDK +3.58%) was upgraded to 'Outperform' from 'Underperform' at CLSA.The WSJ reports that AT&T (T -0.14%) will be the exclusive carrier for Amazon's (AMZN +0.41%) new smartphone.
Booz Allen (BAH -0.18%) was downgraded to 'Underperform' from 'Neutral' at BofA/Merrill.
Southwest (LUV -0.76%) was upgraded to 'Buy' from 'Hold' at Stifel with a price target of $30.
Domino's Pizza (DPZ -0.50%) was downgraded to 'Underperform' from 'Neutral' at BofA/Merrill.
Bloomberg reported that Apple (AAPL +1.01%) has defeated a patent infringement lawsuit over wireless network technology brought by Golden Bridge Technology.
DSW (DSW +0.22%) was upgraded to 'Buy' from 'Neutral' at Goldman Sachs.
SAB Capital Advisors reported a 6.1% passive stake in RCS Capital (RCAP +0.59%) .
Becker Drapkin reported a 8.7% passive stake in Hudson Technologies (HDSN +9.06%) .
Williams (WMB +18.74%) fell 1% in after-hours trading after it filed to sell $3 billion of common stock.
MARKET COMMENTS
Sep E-mini S&Ps (ESU14 +0.16%) this morning are up +0.50 of a point (+0.03%). The S&P 500 index on Monday closed higher. Bullish factors included (1) the unexpected +0.27 point increase in the Jun Empire manufacturing index to 19.28, better than expectations of -4.01 to 15.00 and the fastest pace of expansion in 4 years, and (2) the +0.6% increase in U.S. May industrial production, better than expectations of +0.5%. Bearish factors included (1) concern that escalation of violence in Iraq will force the U.S. to intervene, and (2) the IMF’s cut in its U.S. 2014 GDP forecast to 2.0% from April’s forecast of 2.8%. Closes: S&P 500 +0.08%, Dow Jones +0.03%, Nasdaq +0.12%.Sep 10-year T-notes (ZNU14 -0.05%) this morning are down -0.5 of a tick. Sep 10-year T-note futures prices on Monday closed little changed. T-notes moved higher early in the session after the IMF lowered its U.S. 2014 growth forecast and said that “policy rates could afford to stay at zero for longer than the mid-2015 date currently foreseen by the markets.” T-notes fell back to near unchanged, though, on the stronger-than-expected Jun Empire manufacturing index and Jun NAHB housing market index. Closes: TYU4 +0.50, FVU4 -1.25.
The dollar index (DXY00 +0.03%) this morning is up +0.023 (+0.03%). EUR/USD (^EURUSD) is down -0.008 (-0.06%). USD/JPY (^USDJPY) is up +0.15 (+0.15%). The dollar index on Monday closed lower as the IMF downgraded its U.S. 2014 GDP forecast. EUR/USD rebounded from early losses and closed higher after Bloomberg reported that two unnamed ECB officials said that the ECB is likely to refrain from any additional stimulus in coming months as it reviews bank balance sheets. Closes: Dollar Index -1.105 (-0.13%), EUR/USD +0.00368 (+0.27%), USD/JPY -0.204 (-0.20%).
July WTI crude oil (CLN14 -0.60%) this morning is down -67 cents (-0.63%). July gasoline (RBN14 -0.13%) is down -0.0043 (-0.14%). July crude and gasoline prices on Monday settled mixed. Bullish factors included (1) a weaker dollar, and (2) the stronger-than-expected Jun Empire manufacturing index and May industrial production. Negative factors included (1) the IMF’s cut in its U.S. 2014 GDP forecast to +2.0% from April’s forecast of +2.8%, and (2) a lack of disruption thus far to oil exports from southern Iraq, where 75% of the country’s oil output comes from. Closes: CLN4 -0.18 (-0.17%) RBN4 +0.0163 (+0.53%).
GLOBAL EVENT CALENDAR06/17/2014
| US | 0830 ET | May CPI expected +0.2% m/m and +2.0% y/y, Apr +0.3% m/m and +2.0% y/y. May CPI ex food & energy expected +0.2% m/m and +1.9% y/y, Apr +0.2% m/m and +1.8% y/y. |
| 0830 ET | May housing starts expected -3.9% to 1.030 million, Apr +13.2% to 1.072 million. May building permits expected -0.9% to 1.050 million, Apr +5.9% to 1.059 million. | |
| 1030 ET | FOMC begins 2-day meeting. | |
| JPN | 0200 ET | Revised Japan May machine tool orders. |
| 1950 ET | Japan May trade balance expected -1.189 trillion yen, Apr -811.7 billion yen. May exports expected -1.3% y/y, Apr +5.1% y/y. May imports expected +1.8% y/y, Apr +3.4% y/y. | |
| EUR | 0200 ET | Eurozone May new car registrations, Apr +4.6% y/y. |
| 0500 ET | Eurozone Q1 labor costs, Q4 +1.4% y/y. | |
| UK | 0430 ET | UK May CPI expected +0.2% m/m and +1.7% y/y, Apr +0.4% m/m and +1.8% y/y. May core CPI expected +1.7% y/y, Apr +2.0% y/y. |
| 0430 ET | UK May RPI expected +0.2% m/m and +2.5% y/y, Apr +0.4% m/m and +2.5% y/y. May RPI ex-mortgage interest payments expected +2.6% y/y, Apr +2.6% y/y. | |
| 0430 ET | UK May PPI input prices expected -0.1% m/m and -4.3% y/y, Apr -1.1% m/m and -5.5% y/y. May PPI output prices expected +0.1% m/m and +0.7% y/y, Apr unch m/m and +0.6% y/y. | |
| 0430 ET | UK May PPI output core prices expected +0.1% m/m and +1.1% y/y, Apr unch m/m and +1.0% y/y. | |
| GER | 0500 ET | German Jun ZEW survey of expectations for economic growth expected +1.9 to 35.0, May 33.1. Jun ZEW survey current situation expected unchanged at 62.1. |
| CHI | 2130 ET | China May property prices. |
U.S. STOCK CALENDAR06/17/2014
| Company Name | Ticker | Time | Event Description | Period | Estimate |
|---|---|---|---|---|---|
| Multiple Companies | MDT US | 8:00 | Acquisition of Covidien plc by Medtronic, Inc Call | ||
| Multiple Companies | MDT US | 8:00 | Acquisition of Covidien plc by Medtronic, Inc Call | ||
| Hill-Rom Holdings Inc | HRC US | 8:30 | Acquisition of TRUMPF Medicl by Hill-Rom Holdings Inc Call | ||
| SanDisk Corp | SNDK US | 8:30 | Acquisition of Fusion-io by SanDisk Corporation Call | ||
| Multiple Companies | LVLT US | 9:00 | Acquisition of tw telecom, Inc by Level 3 Communications, Inc.Call | ||
| Affiliated Managers Group Inc | AMG US | 9:00 | Annual General Meeting | ||
| Multiple Companies | LVLT US | 9:00 | Acquisition of tw telecom, Inc by Level 3 Communications, Inc.Call | ||
| Williams Cos Inc/The | WMB US | 10:00 | Acquisition of Access Midstream Partners by The Williams Cos., Inc. Call | ||
| Knowles Corp | KN US | 11:30 | Management Conference Call | ||
| Range Resources Corp | RRC US | Company Investor Meeting | |||
| Principal Financial Group Inc | PFG US | Roadshow - Boston | Y 2014 | ||
| Alliance Data Systems Corp | ADS US | May 2014 Sales and Revenue Release - Performance Update | 2014 |
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